Since You're So Rich, You Must Be Really Smart: Talent, Rent Sharing, and the Finance Wage Premium

• 成果类型: Article
• 署名作者: Boehm, Michael J.; Metzger, Daniel; Stromberg, Per
• 署名单位: Dortmund University of Technology; IZA Institute Labor Economics; Swedish House of Finance; Erasmus University Rotterdam - Excl Erasmus MC; Erasmus University Rotterdam; European Corporate Governance Institute; Stockholm School of Economics; Centre for Economic Policy Research - UK
• 刊物名称: REVIEW OF ECONOMIC STUDIES
• ISSN/ISSBN: 0034-6527
• DOI: 10.1093/restud/rdac079
• 发表日期: 2023
• 页码: 2215-2260
• 关键词: inequality; industry; QUALITY; workers; TRENDS; GROWTH; pay; polarization; COMPETITION; allocation

摘要

Financial sector wages have increased extraordinarily over the last decades. We address two potential explanations for this increase: (1) rising demand for talent and (2) firms sharing rents with their employees. Matching administrative data of Swedish workers, which include unique measures of individual talent, with financial information on their employers, we find no evidence that talent in finance improved, neither on average nor at the top. The increase in relative finance wages is present across talent and education levels, which together can explain at most 20% of it. In contrast, rising financial sector profits that are shared with employees account for up to half of the relative wage increase. The limited labour supply response may partly be explained by the importance of early-career entry and social connections in finance. Our findings alleviate concerns about brain drain into finance but suggest that finance workers have captured rising rents over time.